According to Article 178 in the Mexican General Law of Commercial Companies (Ley General de Sociedades Mercantiles), the annual General Assembly is an important meeting for shareholders to discuss and agree about the company´s actions. As the name already implies, the annual General Assembly takes place once a year, at least. To be more precise, four months after the closing of the previous financial year. Most Assemblies take place in March or April of every year.
Both the director’s general statement and the commissioner’s report are discussed, approved or modified during the meeting. Decisions regarding to the allowances to be assigned to the Directors and the Statutory Auditors are also taken here if not set forth under the statutes.
As for international partners, attending personally is not mandatory and this avoids business trips to Mexico thus saving time.
Failure to comply with the annual meeting undertake
In the specific case a company administrator or board of directors fail to undertake the mandatory annual meeting; they can be held responsible by the company’s shareholders. According to Article 185 of the LEY GENERAL DE SOCIEDADES MERCANTILES the administrator/BoD may be forced by law to celebrate such meeting if no previous meetings have been held for two consecutive years or otherwise if in the aforementioned meeting matters set forth under Article 181 have not been addressed.
Furthermore, failure to submit the company’s progress report during the financial year as well as those policies applicable to significant ongoing projects in a timely manner can be grounds for the General Shareholder´s meeting to remove the administrator/BoD/commissioners from their responsibilities. More importantly in case of an audit by tax authorities where non-compliance results may arise in connection with meetings undertaking as well as the approval of the financial years can certainly lead to penalties imposed against the company.
If you would like further advice,please contact us.